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IPFS News Link • Federal Reserve

David Stockman on the Fed's Giant Economic Science Experiment

• by David Stockman

 Self-evidently, therefore, interest rates below the inflation level are a stimulus because they amount to economic subsidization of debt, and the spending or investment which results.

Still, even the primitive Phillips Curve theory of the growth/inflation trade-offs screams out that the Fed is way behind the curve, even based on its own defective economic models. After all, why in the world has it permitted its ultimate control valve and benchmark—the 10-year UST—to carry a negative real yield for 36 of the last 38 months.

That's right. There is nothing like the pattern shown below in modern history, yet somehow the Keynesian dunderheads domiciled in the Eccles Building have been surprised at the virulence and persistence of the current inflationary tide.

Inflation-Adjusted Yield on 10-Year UST, August 2019 to October 2022

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